Simulation-Based Comparison: An Overview and Case Study

One of the most important simulation applications is the comparison of alternatives. Possible decisions, operating procedures, system designs can be compared through simulation experiments before implementing them in the real life. Stochastic simulation leads to variance of the estimated difference between systems performance measures. The goal of simulation experiments is to obtain point and interval estimates of the difference in mean performance of the models. Different approaches and methods for simulation-based comparison of alternatives are analysed in the paper. A special attention is given to the statistical methods based on confidence interval estimation. In the case study, performances of two alternative replenishment policies in supply chains are simulated and analysed by using the paired-t confidence interval method.